The government's theory is that a national security letter is sufficient to get access to your data. No warrant required. And Dropbox is not allowed to tell you that it happened.
The ability to detect duplication in no way proves the files are unencrypted (indeed this should be obvious from the fact that there is only negligible network traffic to confirm a duplicate! The bits can't be compared if they're not transmitted.)
It's the ability to serve deduplicated files that brings the service into question. Yet I wouldn't be surprised if there exists an asymmetric encryption method which permits decryption with one of several private keys – if so, secure deduplication is trivial: confirm the duplicate using a hash or comparing public-key encrypted versions; re-encrypt using both original and duplicate keys.
(And let's not even forget the ability to reset a forgotten password…)
And yes, they can give your data to the government. Communications to/from Dropbox are encrypted. But it is unencrypted on the back end. See http://paranoia.dubfire.net/2011/04/how-dropbox-sacrifices-u... for how we can know that.